Last week can be called “Interest Rates Week.” Last Wednesday, the FED cut its Interest Rates by 50 basis points, which means they are now 5%. The US Dollar’s weakness was evident right after, and that gave the major currency pairs an advantage in rising against the Greenback. On the next day, the BoE kept the UK’s Interest Rates at 5%, and that gave an advantage to the Sterling against the US Dollar, the Euro and the Canadian Dollar because the FED, the ECB and the BoC recently cut their Interest Rates. Last Friday, BoJ kept Interest Rates unchanged at 0.25%. Usually, when interest rates remain the same or are cut, the currency decreases in value. What we need to see on the price charts right after each event is the market following through and the price moving in the same direction as the event’s outcome.
This week, we expect to see directional moves in the markets and also a high amount of volatility. Starting Monday, in New Zealand, they will report the Trade Balance, and the consensus estimates an increase from -963M to -155M. In Japan, the Banks will be closed all day due to the observance of Autumnal Equinox Day. Due to this, we won't expect changes in market structure and new trends in the Japanese currency pairs. Moving into the European, London, and New York trading sessions, the most significant news events will be regarding the PMIs (Purchase Manufacturing Index). The purpose of all of these surveys is to gather information about the health of the country's economy in different sectors and business activities. This helps better understand if there is improvement in the Unemployment Rate, the GDP (Gross Domestic Product) and the CPI (Consumer Price Index). During the London trading session, in France, they will report the Manufacture PMI, which is expected to increase from 43.9 to 44.3 and the Serviced PMI, which is expected to drop from 55 to 53. Around the same time, in Germany, they will report the Manufacture PMI as well as the Service PMI, which they expected to remain at 42.4 and 51.2, respectively. In the Eurozone, they expected the Manufacture PMI to be around 45.7 and the Service PMI to be around 52.3. As a general rule, a number above 50 is considered a positive for the Euro, whereas a reported number below 50 can make the Euro a weak currency. Next, in the UK, they expected the Manufacturing PMI to be around 52.5 and the Service PMI to be around 53.5. This can add more push to the Sterling, and we might see an uptrend continuation on the GBPUSD and a downtrend continuation on the EURGBP. Similarly, in the US, the Manufacturing PMI is expected to increase to 48.6 and the Service PMI to decrease to 55.3. Again, as long as the number is above the benchmark of 50, in most cases, it is considered as a positive outcome for the US Dollar.
Volatility is expected to skyrocket early on Tuesday morning during the Asian trading session, as the RBA (Reserve Bank of Australia) will report Australia’s interest rates. The consensus estimated that the RBA will keep their rates unchanged at their current 4.35%. Recently, many of the major banks cut their interest rates. This inevitably caused a depreciation of their currency. Usually, when a central or major bank keeps the rates unchanged, their currency also has negative effects. The difference between this time and period is that if a central bank keeps its rates unchanged, its currency will be against a recently depreciated currency because of the cut in interest rates. In this case, the Aussie may depreciate, but against the Euro, for example, the Canadian Dollar or the US Dollar, it might perform with strength. Therefore, if this happens and the market follows through, we might see bullish moves on the AUDUSD and AUDCAD and bearish moves on the EURAUD. Next will be the speech of BoJ Governor Ueta. Last week, the BoJ reported its interest rates. Ueta will explain how the BoJ sees Japan's economic future.
During the London trading session, in Germany, they will report their Bussiness Climate Index and the forecast estimates a decrease from 86.6 to 86.1. This is not a significant change, and it usually doesn’t cause trend reversals in the Euro currency pairs. Moving into the New York trading session, in the US, they will report the Consumer Confidence and the consensus estimates a small increase in the number, from 103.3 to 103.5. The volatility is expected to be noticeable around these events, and day traders should keep this in mind for better risk and position management. Next, and the last event for the day, will be the BoC Governor Maclkem speech.
Wednesday is expected to be a short day in terms of significant news events. Starting in Australia, during the Asian trading session, they will report the CPI (Consumer Price Index). The forecast shows that from 3.5%, the inflationary indicator is expected to drop to 2.8%. If this happens and at the same time the market follows through, we expect to see a significant drop in the Australian Dollar across the currency board. As we explained in a previous Market Outlook, a reduced CPI number is great for consumers who buy products and services at better prices within the country, but for the currency, it has a negative impact as it tends to weaken it.
The next important event will be the Annual Total New Home Sale in the US. The forecast estimates a decrease from 739K to 693K. At the same time, they will also report the New Home Sales in the US, in which the forecast shows a decrease in the number and from 10.6%, it is expected to drop significantly to -5.3%. This is an indication that new homeowners in the US are much fewer compared with the previous reports, which means there were fewer bank loans to purchase new homes. It will reveal some valuable information about the health of the economy and the CPI in the US.
Moving into Thursday’s significant news events, during the Asian trading session, there will not be any of these. Therefore, the markets are expected to move with normal volatility. Traders' attention will be on the Swissy (Swiss Frank) as the SNB(Swiss National Bank) will report Switzerland’s Interest Rates. The SNB is expected to proceed with a 25 basis point rate cut following the FED’s example last week. If they cut their interest rates and, at the same time, if the market follows through, a significant drop in the Swiss Frank value is expected to be seen on the price charts. This can allow the USD to climb higher, as we will explain in the chart analysis of the USDCHF. Next, in the US, they will report the quarterly GDP(Gross Domestic Product), which is expected to drop from 3% to 2.9%. At the same time, the Unemployment Claims are expected to increase from 219K to 224K. The volatility is expected to increase noticeably a while later as the FED’s Chairman Powell will give a speech. One week after the FED’s rate cut, all market participants will anticipate the outcome of his speech. Usually, as we have experienced in the recent past, we see how the USD will move accordingly after he finishes high speech.
Friday will be the last trading day of this week, and the volatility in the Japanese Yen is expected to rise early in the morning. During the Asian trading session, Japan will report the CPI (Consumer Price Index). The forecast estimates a drop from 2.4% to 2%. In this case, if the outcome confirms the forecast and the market follows through, the Japanese Yen is expected to become a weak currency at that time. It might give some room to the USD to lift the USDJPY pair higher and, at the same time, the GBPJPY, as fundamentally, the GBP is expected to be one of the strongest currencies on the board. The trading day will end with the GDP(Gross Domestic Product) in Canada, which is expected to increase from 0% to 0.1%. If this is confirmed by the reported outcome and the Canadian Dollar strengthens, it can move the USDCAD to a lower price, at least temporarily, and it can also help the USOIL prices gain some more value.
EUR USD 4H
The Fed’s cut on interest rates last Wednesday was the driving factor behind the continuation of the EURUSD currency pair's uptrend. The candlestick on the weekly chart ended as a Bullish continuation price action. On the 4-hour chart, the price creates a series of higher highs and higher lows, and this is bullish.
The 20-period crossed above the 50-period moving average, known as a Bullish Crossover. Additionally, The 50-period is above the 200-period moving average. The RSI Oscillator is above its middle line of 50, and this has bullish implications. Last Thursday, the MACD created a Bullish crossover above its middle line of zero, and this is bullish. The MACD’s Histogram is above the zero line, indicating the buying pressure in this market. Starting Monday, if the price continues moving upwards, the first resistance area, R1, will be the previous week’s high, around 1.11892. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be the only 100 points (10pips) above the R1, around 1.1200. This is an important price level for the EURUSD pair. If the price keeps increasing, penetrates the R2 level, and continues moving upwards, the next resistance area, R3, will be an older weekly high price, around 1.12757.
Oppositely, if the price declines and moves downwards, the first support area, S1, will be the previous week’s low, around 1.10686. This is a significant area because it consists of the 61.8% Fibonacci retracement from the swing point (a) to the swing point (b) and the Bullish Engulfing Order Block, as shown on the chart. If the price doesn't hold above the S1, and instead of this, it penetrates it and moves further downwards, the next support area, S2, will be an order weekly low level of around 1.1000.
GBP USD 4H
Despite the fact that the BoE kept the interest rates in the UK unchanged, the Sterling was one of the strongest currencies across the board last week. This happened primarily because the FED cut the IR in the US, making the USD a much weaker currency. The weekly chart shows a price action called Bullish Marubozu. On the 4-hour chart, the price maintains a strong uptrend as the price remains above the 20-period moving average. The 50-period is above the 200-period, and this is bullish. The RSI Oscillator is above its zero line and almost in an Overbought condition. The Stochastic Oscillator is above its upper line of 80, meaning that it's in an Overbought condition. Last Thursday, the price created a Demand area around 1.31500, and afterwards, it moved upwards and it created a new higher high in the market.
Hence, if the price continues moving upward, the first resistance area, R1, will be around 1.3340, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be approximately 1.34373, which is an older weekly level. On the other hand, if the price enters a retracement phase and moves downward, the first support area, S1, will be the previous week’s low, around 1.31217. At a short distance below the S1, there is a 4-h Bullish Engulfing Order Block and a Demand zone that can cause significant support for the price. If the price penetrates the S1 and declines further, it will first end the current uptrend. If the price continues moving downwards, the next support area, S2, will be an older weekly low of around 1.30020.
AUD USD 4H
Following the previous week’s Market Outlook, the price of the AUDUSD currency pair kept moving upward as expected. For the second week in a row, the weekly chart ended with a bullish candle around a significant resistance of 0.68000. Last Thursday, the price created a Bullish Engulfing reversal pattern on the 4-hour chart, which caused the price to create a new higher high formation. The 50-period is above the 200-period, and because the distance between these two gets wider, it means that the trend created becomes stronger. Regarding the Oscillators Analysis, the RSI is above its middle line of 50, and it has bullish implications.
Additionally, the Stochastic Oscillator is almost at its upper boundary, which is bullish. Last Friday, the price was moving sideways creating the range as shown on the chart. Starting Monday, if the price breaks above the range and moves upwards, the first resistance area, R1, will be approximately 0.68391, which is the previous week’s high. If the price penetrates the R1 resistance and continues moving upwards as expected, then the next resistance area, R2, will be around 0.68711, which is an older weekly level. A further upward move will find the next resistance area, R3, approximately 0.68977.
On the other hand, if the price declines and moves downwards, the first support area, S1, will be around 0.67378. This price level coexists with the 50-period moving average and the Bullish Engulfing Order Block created last Thursday. If the price penetrates the S1 support and decreases further, the next support area, S2, will be the previous week’s low, around 0.67036. This level consists of the 200-period moving average and the FVP (Fair Value Price) created last Monday. In case the price surpasses the S2 support and keeps moving downwards, the next support area, S3, will be an older weekly level around 0.66222.
USD JPY 4H
Following the previous week’s analysis, the price on the weekly chart created a Bullish Engulfing reversal candlestick pattern. Despite the USD Dollar’s weakness across the board, the Japanese Yen apparently became an even weaker currency as we see the price action on the chart with a Long Lower Wick after the Interest Rates announced in the US. This usually happens when either the base or the quote currency from the currency pair doesn’t follow through after a significant news event outcome. Using the Bollinger Band indicator, the price is above its middle line, which is the 20-period moving average, and currently is around its Upper Band, which has bullish implications. The RSI is above its middle line of 50, and this is bullish. The MACD is above its zero line. MACD’s Histogram is also above the zero line, indicating rising prices in the USDJPY pair. The Lower Band of the Bollinger Band Indicator is pointing upwards, which means that the current upward momentum is weakening.
Therefore, if the price starts a retracement phase and it moves downwards, the first support area, S1, will be around 141.739. This level is considered as significant because it consists of the Bullish Engulfing Order Block created last Friday after the BoJ reported unchanged Interest Rates and also with the Golden Ratio 61.8% of the Fibonacci retracement. If the price won't stay above the S1 support and if it penetrates it, the next support area, S2, will be approximately 139.579, which is the previous week’s low.
Conversely, if the price continues its upward move, the first resistance area, R1, will be the previous week’s high, around 144.497. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be an older weekly level of around 147.212.
USD CHF 4H
Last week, we explained that based on the weekly price action, the USDCHF currency pair was expected to move upwards rather than in the opposite direction. Although during the Interest Rates report by the FED, the USD experienced weakness, at the end of the day, the candlestick pattern with the Long Lower Wick, as shown on the chart, caused the market to create a False Breaout of the Lower Band of the Bollinger Band indicator as well as of the previous week’s support areas, from where it bounced off and moved higher. Since then, the price has entered into a sideways move. This is visible on the Bollinger Band indicator as the Upper and the Lower Band point almost parallel to each other. The RSI Oscillator is above 50, and this has bullish implications. As the weekly price action created a Bullish Hammer, it can cause the prices to move higher next week.
Starting Monday, if the price continues its upward move, the first resistance area, R1, will be the previous week’s high, around 0.85150. If the price penetrates R1 and keeps increasing, the next resistance area, R2, will be an older weekly level of around 0.85489.
On the other hand, if the price declines and moves downward, the first support area, S1, will be around 0.84516. If the price won’t find support around this level and instead of bouncing off, it penetrates it, then the next support area, S2, will be approximately 0.83903, which is the previous week’s low.
GBP JPY 4H
The move of the GBPJPY reveals exactly how the markets move when a strong currency is paired with a weak currency. Both the BoE and the BoJ kept their interest rates in their countries unchanged, but the Sterling was appreciated more by traders and market participants. This is why a strong uptrend was created, as we can see on the chart. Since Monday, the pair has made a series of higher highs and higher lows, which the Upward Trendline T1 defines. The 20-period crossed above the 50-period moving average, and this is bullish. The RSI is in an Overbought condition, indicating bullishness. The Stochastic Oscillator is also in an Overbought condition. Still, it created a Bearish Crossover once the %K Line (Blue) crossed below the %K Line (Orange) while the Oscillator is above its upper line of 80. This can cause the price to start a retracement phase. As the price didn't create a confirmed swing high, we can not use the Fibonacci Retracement tool to predict the levels of retracements. Therefore, if the price continues moving upwards, the first resistance area, R1, will be the previous week’s high, around 191.97. If the price penetrates the R1, and keeps moving upwards, the next resistance area, R2, will be an older weekly level around 193.49. In case the price penetrates the R2 resistance level and it keeps increasing, the next resistance area, R3, will be approximately the 199 level (not shown on the chart).
Oppositely, if the price starts a retracement phase and moves downwards, the first support area, S1, will be Inside support around 190.39. In case the price penetrates the S1 and moves lower, the next support, S2, will be the previous swing low level, around 188.70. If the price penetrates the S2 and keeps moving downwards, it will change the market structure, and then, the next level of support, S3, will be around 185.826. This level is considered as significant because it coexists with the Bullish Engulfing Order Block created last Wednesday.
GOLD 4H
For the second week in a row, the price of the GOLD made a new ATH (All-Time High). The price on the weekly chart ended as a Bullish Marubozu candle, indicating a strong buying trading activity in the market. On the 4-hour chart, the 20-period moving average is above the 50-period moving average, and this has bullish implications. The RSI Oscillator is in an Overbought condition, which is bullish. The MACD, on the other hand, is above its zero line and last Friday, it created a Bullish Crossover, which means that the MACD Line (Blue) crossed above the Signal Line (Orange). Starting Monday, if the price keeps moving upwards, the first resistance area, R1, will be the ATH (All-Time High) around $2625. If the price penetrates it and keeps moving upwards, the next resistance area R2 is estimated to be approximately $2660.
Oppositely, if the price declines and moves downwards, the first support area, S1, will be an Inside support, around $2594. This price level can be an important price area for traders to execute buy orders as it consists of the S1 static support, the FVP (Fair Value Price), and the 20-period moving average. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be the previous week’s low, around $2546. Last Wednesday, a Bullish Engulfing Order Block formed above this level, and it can be an additional price support. If the price doesn't hold above the S2 support and it declines further, the next support area, S3, will be approximately $2500.
USOIL 4H
Following the previous week’s analysis, the price of USOIL moved upwards, as we explained last week, based on the weekly reversal swing low formation. The price ended another week with a bullish candle. On the 4-hour chart, the price is making higher highs and higher lows, which indicates bullishness. On the 4-hour chart, the 20-period is above the 50-period moving average, which is bullish. The RSI Oscillator is above its middle line of 50, and this is also bullish. Last Friday, the price retraced 61.8% of its last upward move based on the swing that was created from point (a) to point (b), as shown on the chart. The price then created a Bullish Engulfing reversal candlestick pattern. Therefore, if the price continues moving upwards, the first resistance area, R1, will be around $72.47, which is the previous week’s high. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be approximately $74.36, which is an older weekly level.
On the other hand, if the price declines and moves downwards, the first support area, S1, will be around $69.58. If the price penetrates the support at S1 and moves further down, it will end the current uptrend. If the price continues moving downwards, the next support area, S2, will be the previous week’s low, around $68.63. This swing low created a Bullish Engulfing Order Block last Monday, and it can provide additional support to this price level.
BTC USD 4H
The price of Bitcoin gained significant upward momentum early in the previous week based on the anticipation of lower Interest Rates in the US. As Bitcoin started gaining more trust from traders and investors and, to some extent, it is considered a “Safe Heaven” instrument, significant news events can create enormous volatility and directional moves to the BTCUSD pair. Last Wednesday, a Bullish Marubozu candlestick pattern created a higher high formation on the BTCUSD pair, and it caused the 50-period moving average to cross above the 200-period moving average, known as the “ Golden Cross”. That also forced the RSI Oscillator to enter into its overbought condition temporarily, and by the end of the week, it remained above its middle line of 50, indicating bullishness. On the same day, the price created an FVP (Fair Value Price) of around $62500, which hasn't been mitigated yet.
Starting Monday, if the price declines and moves downwards, the first support area, S1, will be around $59164. This price level is considered a Key Support level because it consists of the static support S1, the 200-period moving average, and the 4-hour Bullish Engulfing Order Block created last Wednesday. It hasn’t been tested yet, but this Order Block can become an additional support factor for the price. If the price penetrates the S1 and keeps lowering, the next support area, S2, will be around $57488, which is the previous week’s low.
Conversely, if the price keeps moving upwards, the first resistance area, R1, will be around $64087, the previous week’s high. If the price penetrates the R1 resistance and keeps moving upwards, the next resistance area, R2, will be approximately $65000. If the price keeps increasing, the $69000 area will become the next resistance level, R3.
SP 500 4H
With a new ATH (All-time High), the SP500 ended last week. The price on the weekly chart printed a Bullish price action, and it closed above the previous week’s high, which is an indication of a bullish continuation. On the 4-hour chart, the price kept making higher highs and higher lows. Last Friday, the price moved sideways, maintaining its current uptrend. The 50-period is above the 200-period moving average, and this is bullish. The RSI is above its middle line of 50, indicating bullishness. The Stochastic Oscillator is above its upper line of 80, indicating an Overbought market. Last Friday, though, the Oscillator created a Bearish Crossover while it was in an overbought condition, and this indicates a temporary pause in the uptrend. After that, the Sideways move occurred, as seen on the chart. The Bearish Crossover occurs when the %K Line (Blue) crosses below the %D Line (Orange). If the price enters a retracement phase, the 61.8% Fibonacci Golden Ratio is close to $5660, and it can act as a support in the market. Hence, the static support S1 is around $5604. This level coexists with the 50-period moving average and the 4-h Bullish Order Block created last Monday, and it hasn’t been tested yet. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be approximately $5405, which is the previous week’s low.
Conversely, if the price moves upwards, the first resistance area, R1, will be the previous week’s high, around $5747 (ATH). If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be $5787. If the price moves further upwards, the next resistance, R3, will be around $5811.
US 30, 4H
Following the previous week’s Market Outlook, the price of the US30 kept rising, and the weekly price action ended in a Bullish Marubozu candlestick pattern. Although the size of the candlestick’s body is not larger than the previous week’s candlestick, it is still considered a significant upward move. On the 4-hour chart, the 50-period moving average is above the 200-period, and this is considered bullish. The RSI is in an overbought condition, which has bullish implications. The Stochastic Oscillator is also in an Overbought condition. Last Wednesday, after the FED announced the interest rates in the US, the price created a Bullish Order Block on the 4-hour chart.
Additionally, as the price created a new ATH(All-Time High), in order for us to know approximately the next price targets, we can use the Fibonacci Extension and mark on the chart the 161.8% and 200% numbers. Starting Monday, if the price continues moving upwards, the first resistance, R1, will be the previous week’s high, which is the ATH, at $42232. If the price penetrates the R1 resistance and keeps moving upwards, the next resistance area, R2, will be the $42435. If the price penetrates the R2 and keeps increasing, the next resistance area, R3, will be around $42560. On the other hand, if the price declines and moves downwards, the first support area, S1, will be around $41483. This level coexists with the Bullish Order block created last Wednesday. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around $41320, which is the previous week’s low.
GER 30, 4H
Following last week's continuation of the uptrend, the price created a new ATH (All-Time High) around 19053. As the price started declining, and by the end of last week, it had not remained above 19000, the price action on the weekly chart ended as a Long-Legged Doji candlestick pattern (not shown on the chart), and this has bearish implications. The higher highs and higher lows in the 4-hour chart are still maintained. The price is above the 50-period moving average, and this has bullish implications. The 50-period is above the 200-period moving average, and this is bullish. The RSI Oscillator is below 50, and this has bearish implications. Additionally, the MACD created a Bearish Crossover while it was above its zero line, as the MACD Line (Blue) crossed below its Signal Line (Orange), and this is bearish.
Starting Monday, if the price bounces off the 50-period moving average, which is currently at and moves upwards, the first resistance area, R1, will be around 18897. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be the 18964. Last Friday, the price created a Breakaway Gap in that area, and it can act as an additional resistance to the price. If the price penetrates the R2 and keeps moving upwards, the next resistance, R3, will be the ATH around 19053. A Bearish Order Block was created last Thursday, which can be an additional resistance factor for prices around this level.
Conversely, if the price declines and moves downwards, the first support area, S1, will be around 18593, which is the previous week’s low. A Demand area formed around this price level, as shown on the chart. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be approximately 18375.
